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General fund revenue account budget: supplementary guidance on adequate validation explanations

Updated 15 February 2024

Applies to England

We have had requests for guidance on what details are expected in explanation comment boxes in the forms.

Where a value entered is substantially different from comparator data, or when a value which appears to be invalid, then a message appears on the form asking for an explanation. We repeat these checks in our data bases and we chase up wherever an adequate explanation has not been provided.

What is required for an adequate explanation

An adequate explanation is a comment that is specific and which:

i) gives details of what is the cause of most of the variance relative to a comparator figure. In the case of change in service expenditure, the descriptions should describe the change in services provided or eligibility. Where possible - perhaps more for outturn than budget data - If there are several notable large components, then each should be listed with their approximate size.

ii) explains why a figure has taken an unexpected value (e.g. zero / positive / negative. A number of the data items cannot normally be all of these. Please note that in our returns that updates/corrections for previous time periods should be addressed by editing the data for the previous period, not by an adjustment in a later period.

Examples of adequate explanations from RA 2020-21

“Last years figure included budget allocated to academies whereas this is it doesn’t. We have submitted revised figures to exclude academies which indicated this balance should have been £x,xxxk. This years figures would therefore be within your tolerance levels.”

“The Council has made a significant provision to recognise the large and increasing deficit on DSG. RA698 also includes an amount of £xx.xm to represent expenditure on COVID-19 costs which are compensated by Government funding.”

“The Council expects to receive additional income of £xxm relating to the introduction of a Clean Air Zone. The corresponding expenditure has been allocated to reserves until the income is realised.”

“Largest movement was due to an error in our previous years return which had the management fee posted the wrong way around. Therefore xxxxxx had £200m overstated expenditure in this category. We corrected this in all subsequent returns. Other reasons are general reduction in operating costs like for like and £30m reclassified to line xxx.”

Inadequate explanations

The most common reason for inadequate explanations is when only a generic comment is provided:

eg 1 “figures reflect new/revised priorities/budget” – this provides no insight as to what has changed. In almost all cases, we would expect some description of the changes, such as brief details of the change in services provided, or the change in eligibility, as appropriate.

eg 2 “last year was incorrect”, or “we are now allocating spend more correctly to the categories”. This isn’t helpful unless it include an explanation of what type of spend was misclassified previously.

Please be sure to provide brief specific details of the main cause(s) of most of the unexpected figure, and please refer to ‘What makes for an adequate explanation’ above.

Examples of inadequate explanations from RA 2020-21

Example	Deficiency
“Re-profiling of budgets” / “change in budget priorities”	No detail provided
“Was zero 19/20”	No description of what this new expenditure or quantity relates to
“Increased costs expected”	Should give some detail of: on what specifically are increased costs expected, and if possible why.